Most cities will make your life miserable with regulations you never
thought of if you notify them that you are opening a machine shop.
  From my experience, you would be well advised to start your shop in a
location that is as stealth as possible.   Dont decline cash.  I'd advise
that you do your own accounting till that task is too burdensome.
  You will soon know if the shop is profitable enough to seriously effect
your income and what you need to disclose to the governments, city, state,
and federal.

  I have one bit of advice.   If you do get a shop going well enough to
register it with the city, buy the property where your shop is.

                      Jerry